Stiff competition, high employee costs lead to financial stress in MTNL, BSNL, but no proposal to shut down state-run units: Ravi Shankar Prasad

New Delhi: The government on Wednesday clarified there is no proposal to close state-run BSNL and MTNL, which are facing financial stress due to stiff competition and high employee costs, and added that a comprehensive plan for their revival is under preparation.

"No proposal of closure of Mahanagar Telephone Nigam Limited (MTNL) is under consideration," Telecom Minister Ravi Shankar Prasad informed the Lok Sabha.

In a separate reply, he said there was no such proposal under consideration for BSNL as well.

"Indian Institute of Management, Ahmedabad and Deloitte were engaged to facilitate the preparation of the revival/ restructuring plan of BSNL and MTNL respectively. Pursuant to their recommendations and approval of respective Boards, a comprehensive revival plan for BSNL and MTNL is under preparation," Prasad added.

The loss-making telecom firms have approached the Department of Telecom for immediate help as they are facing financial stress, which has aggravated due to the tariff war triggered by the entry of Reliance Jio.

Prasad further said the employee cost of BSNL is 75.06 percent and that of MTNL is 87.15 percent of their total income, while the same for private telecom companies varies between 2.9 to 5 percent.

 Stiff competition, high employee costs lead to financial stress in MTNL, BSNL, but no proposal to shut down state-run units: Ravi Shankar Prasad

File image of law minister Ravi Shankar Prasad. Twitter/@BJP4India

The government wants to take care of the employees and yet revive these PSUs for fair competition in the market, he added.

According to data shared in the Lok Sabha, the market share of MTNL in the two circles where it operates has declined to 6.95 percent at the end of 2018-19 from 7.37 percent in 2016-17.

BSNL's market share, despite the cut-throat competition, increased to 10.72 percent from 9.63 percent on pan-India basis during the same period.

"The telecom sector is facing financial stress due to stiff competition and a reduction in tariffs. The gross revenue of two private operators ie Airtel and Vodafone/Idea has also reduced in FY 2017-18 and FY 2018-19," Prasad added.

He also said the government is utilising BSNL for providing mobile connectivity in Naxal-affected areas, improving telecom network in Andaman and Nicobar and Lakshadweep islands, optical fibre based network for defence services and execution of BharatNet project, among others.

The minister said there was a delay of some days in payment of salary in the last five to six months at MTNL due to a shortage of funds arising out of mismatch in revenue inflows and liability outflows, but now no salary payment is pending.

"The salary to BSNL employees is being paid regularly. However there was some delay in the salary paid for the month of February 2019," Prasad said.

According to official data, a total of 1,63,902 employees, including 46,597 executive and 1,17,305 non-executive, were working in BSNL as on 31 March 2019. MTNL's staff strength stood at 21,679 (3,128 executive and 18,551 non-executive employees).

Updated Date: Jun 27, 2019 07:22:34 IST